By Meghan Hall
A Class B office and research and development property has landed a big tenant: Facebook. The global technology company, who has been expanding steadily throughout the East Bay since moving into Fremont in 2017, has taken 229,530 square feet in the Ardenwood district. The lease was disclosed in a CBRE market report, while the Silicon Valley Business Journal was the first to confirm Facebook was the tenant in the deal.
The two buildings that Facebook took are located at 6800 and 6900 Dumbarton Circle, owned by Bay Area developer Peery Arrillaga. CBRE reports that the lease was the largest R&D deal of the first quarter.
The buildings were previously leased to Tesla, and built in 2003, according to an offering flyer advertising the sublease. The buildings also have an on-site gym, café and training facilities, as well as more than 1,200 parking stalls. The master lease expiration at the time that the sublease space hit the market was March of 2029.
Facebook began leasing space in 2017 and has picked up momentum in recent years. So far, the firm’s rental agreements include more than one million square feet of space. A quarter of the square footage was leased from The Sobrato Organization, while the remaining 750,000 square feet of those commitments were solidified with Peery Arrillaga across 14 different buildings. In November of last year, Peery Arrillaga also purchased a Facebook-leased building at 6750 Dumbarton Circle for $38.5 million, or about $326 per square foot. The building totals 119,000 square feet.
During the first quarter, the Silicon Valley R&D market saw about 400,000 square feet of negative net absorption during the first quarter. Nine subleases added 435,881 square feet of vacant sublease space. R&D vacancy increased by 30 basis points to 7.4 percent, and the cities of Fremont and Newark were the only markets to see a quarterly decrease in vacancy, which fell to 5.2 percent, according to CBRE. Rental rates sat still at $2.73 per square foot triple net, the first quarter since Q4 of 2010 that lease rates did not increase within the R&D sector.